Gold hits 7-month low on worries on fate of Fed's stimulus
A number of Fed officials think the central bank might have to slow or stop buying bonds before seeing the pickup in hiring the program is designed to deliver, according to minutes of the central bank's policy meeting last month which were released on Wednesday.
The Fed's three rounds of quantitative easing played an essential role in gold's record-breaking rally in recent years, as the metal's inflation-hedge appeal attracted investors worried about currency debasement as a result of rampant cash printing by central banks.
But the sentiment started to shift late last year when signs emerged that the U.S. economy started to recover, raising doubts on the necessity of large-scale quantitative easing and cooling sentiment in gold.
"It is all about the Fed," said a Shanghai-based trader, "Physical material buyers may jump in at this level, but investors are mostly cautiously watching the next move."
The next level of support for gold will be around $1,527, the lowest in 2012, he said.
A firmer dollar added to the pressure. The dollar index jumped to a three-month high in the previous session, weighing on dollar-priced commodities as a stronger greenback makes them more expensive for buyers holding other currencies.
Spot gold dropped as much as half a
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